Why does ESG matter?

In my experience, these conversations tend to be motivated by a mix of the following three factors:

• organisational value,
• access to capital,
• compliance.

Organisational leaders are getting savvier about articulating a clear ESG business case to their stakeholders. As well as having altruistic benefits for the environment and wider society, a sustained focus on ESG can bring significant added organisational value. Smart leaders recognise this ESG uplift.

ESG initiatives

ESG initiatives provide opportunities for organisations to position themselves as employers of choice, to increase staff retention and engagement, to reduce operational costs, and to enhance their risk management, among many other benefits.

Money is becoming available to support projects that can demonstrate clear and measurable ESG outcomes, or for organisations that can clearly articulate their ESG credentials. This is particularly important for public and social sector organisations operating in a resource-constrained environment.

Additionally, as more financial services organisations look to allocate capital to ESG-related projects to demonstrate their own ESG commitment, the cost of capital can be significantly reduced. We see this, for example, through preferential interest rates or other borrowing terms for ESG projects.

Regulations

Regulation is also an important driver of change. Policymakers are trying to keep pace with changing attitudes towards ESG and nudge organisations towards improved ESG outcomes.

In my view, however, compliance with ESG regulation should be a by-product of taking ESG seriously, not your main motivation for pursuing change. If you approach ESG solely with a compliance mindset, it inevitably means that you miss out on the added-value or financial benefits that ESG can offer.

It is encouraging to see that ESG is rapidly rising up the public services agenda. Yet there is still a tremendous way to go before organisations can claim to have truly ingrained ESG within their DNA.

It matters that we all start taking these issues seriously today, not only to safeguard the planet and our society for future generations but so that organisations can safeguard their own futures too. In a more ESG-focused culture, the organisations that don’t embrace these changes will increasingly find themselves irrelevant.

Get in touch

If you would like to discuss how to implement ESG within your organisation, please click the button below to submit an enquiry, and a member of the team will be in touch shortly.

Contact us today